Tax Cuts, Part 2: Trump Wants Another Crack at the Code

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The tax overhaul may not be generating the kind of political momentum Republicans were hoping for, but that’s not stopping them from talking about another round of tax cuts.

President Trump has been hinting at a second Republican tax package, most recently Wednesday at a Boeing factory in St. Louis, where he told a group of supporters, “We’re now going for a phase two.”

House Ways and Means Chair Kevin Brady (R-TX), one of the lawmakers who played a key role in pushing the tax cuts through in December, told Fox Business Wednesday, “We think even more can be done,” while noting that tax cuts for families are “not yet permanent.”

The individual tax cuts expire after 2025, though Republicans have been saying they would like to see them made permanent ever since the bill passed. According to a recent paper by Harvard economists Jason Furman and Robert Barro, making the expiring provisions permanent would cost an additional $500 billion in lost revenue, while boosting GDP by an additional 0.8 percent over 10 years.

Politico speculated that in addition to the individual provisions, a new tax package could take aim at capital gains taxes. "A second tax-cut proposal would also give Republicans a chance to revive a number of ideas they were forced to drop during consideration of their tax-code rewrite, such as a long-sought cut in the capital gains tax rate,” Politico’s Brian Faler wrote.

Larry Kudlow, Trump’s new top economic advisor, touched on both issues Wednesday, telling CNBC that “individuals deserve a permanent break,” and that he would like to see the capital gains tax cut, with the rate indexed to inflation.